• Employers Liable for Vicarious Mental Conditions -- Bailey v. Republic Engineered Steels (2001), 91 Ohio St.3d 38
  • May 7, 2003
  • Law Firm: Dinsmore & Shohl LLP - Cincinnati Office
  • There are few certainties in the world of Ohio workers' compensation law. Until recently, however, one which seemed to exist was the so-called "mental-mental" rule. Under this doctrine, a psychological condition was not compensable for purposes of workers' compensation unless the condition arose from the injured workers' injury or occupational disease. So well-accepted was this doctrine that it was eventually codified by the Ohio General Assembly in ยง 4123.01(C)(1) which in defining "injury" specifically indicates that an injury does not include "psychiatric conditions except where the conditions have arisen from an injury or occupational disease."

    Even under the current makeup of Ohio's Supreme Court, where employers' interests have been dealt a succession of blows in the area of workers' compensation, the mental-mental doctrine seemed safe. As recently as 1998, the Court had specifically declined to change the traditionally-understood principles concerning mental conditions. The relative predictability of decisions in this area recently changed, however, when the Supreme Court issued its decision in Bailey v. Republic Engineered Steels (2001), 91 Ohio St.3d 38, on February 7, 2001.

    The facts of Bailey are both tragic and compelling, and certainly lend support to the old legal saw that bad facts make bad law. On May 15, 1996, Leonard Bailey, was operating a tow motor at Republic Engineered Steels when he accidentally ran over and killed a co-worker. Understandably, Mr. Bailey received treatment for severe depression as a result of the tragic accident.

    Bailey suffered no physical injury, but filed a claim for workers' compensation benefits for a psychological condition which was administratively denied under the well-settled rule that mental conditions are not compensable in the absence of a physical injury. Bailey appealed the denial of his claim to the Court of Common Pleas, where the Trial Court granted the employer's motion to dismiss. After the Fifth District Court of Appeals reversed the Trial Court, the Supreme Court accepted the case for review upon the certified question of the Court of Appeals "Whether a psychiatric condition arising from a compensable injury or occupational disease suffered by a third party is compensable under R.C. 4123.01(C)(1)."

    Ohio's employers had reason to be confident that the traditional understanding of the mental-mental rule would prevail. After all, in 1998, the Supreme Court had issued its decision in Bunger v. Lawson Co. (1998), 82 Ohio St.3d 463, where the Court held yet again that purely mental injuries do not give rise to workers' compensation claims. In the Bunger decision, the claimant, Rachel Bunger, had been working alone at a convenience store when the store was robbed late one night. As a result of the robbery, she underwent treatment for post-traumatic stress disorder. Despite the equally-compelling facts of the Bunger case, the Supreme Court nevertheless denied workers' compensation benefits in the case, reaffirming the traditional rule.

    In Bunger, however the Court did chip away at the immunity traditionally afforded to employers, holding that although purely mental injures were not compensable for purposes of workers' compensation, an employer would not be immune from a potential action outside of the workers' compensation system for negligent infliction of emotional distress. Although employers were certainly not happy with that portion of the Bunger decision, they took solace in the Court's comments that the potential cause of action for negligent infliction of emotional distress was extremely limited, and would potentially apply only in instances "where the Plaintiff has either witnessed or experienced a dangerous accident or appreciated the actual physical peril." While Bailey certainly experienced such a dangerous accident, the fact that he caused the accident would likely relieve the employer of liability for negligent infliction of emotional distress, this depriving him of the "new" Bunger remedy.

    So another remedy was crafted. Justice Sweeney, writing for the majority in Bailey, greatly expanded the potential compensability of purely mental injuries in yet another sharply divided four-to-three Ohio Supreme Court opinion. In Bailey, the majority seized upon a perceived ambiguity in the statute, noting that the statute requires only that the psychological condition arise from "an" injury or occupational disease. Since the General Assembly had not specifically indicated that the predicate "injury" could not be one experienced by a third party (perhaps because no one ever imagined such a bizarre interpretation), the Court found that the legislature must have intended to permit compensation for an employee's psychiatric conditions which arise as the result of an injury to a third party.

    Justice Cook provided a thoughtful and persuasive dissenting opinion, joined by Justice Lundberg Stratton and Chief Justice Moyer. Justice Cook pointed out that the prefatory language of 4123.01 defines "injury" to include any injury received in the course of and arising out of "the injured employee's employment."

    Following that introductory language, the statute further narrows the compensability of psychiatric conditions to those arising out of an injury. When placed in its proper context, then, the injury must occur to the employee claiming the mental condition. Thus, at best the "ambiguity" cited by the majority is contrived. Justice Cook went on to point out that, contrary to the majority's allegation that they were correctly interpreting the intent of the General Assembly, it was far more likely that the General Assembly, in failing to change the statute over the years, was perfectly content with the line of cases supporting the traditional understanding of the rule. Finally, Justice Cook pointed out that the majority's decision failed to even acknowledge the Bunger decision, issued less than two years ago, and which is squarely at odds with the Court's holding in Bailey.

    Overall, then, is the sky really falling? Only time will tell. Certainly, employers, in the aftermath of Bailey have visions of new and unforeseen liability for alleged mental conditions arising from the witnessing of, for example, a co-worker who has injured his or her back. Although this case involves a tragic scenario and death of a co-worker, nothing in Bailey specifically limits the newly-recognized compensability to such circumstances. Moreover, the really compelling cases which could be compensable under a mental-mental scenario (workers who are subjected to threats or criminal assaults in the course of their employment, typically late at night in retail settings) are still subject to the more costly and less predictable Bunger cause of action. Ohio employers are left to hope that the General Assembly will act quickly and responsibly to amend the statute to eliminate all doubt and specify that a psychological condition can only be compensable when it arises out of the injured worker's injury.